Friday, December 26, 2008

iPhone anticlimax

iPhoneAs predicted, the iPhone is coming to Wal-Mart. The retailer announced this morning that starting on Sunday, the iPhone 3G will be available at 2500 stores nationwide.

Also as predicted — at least by those who knew anything at all about Apple Inc. — the phone is being offered at the same price as everyone else, less the $2 Wal-Mart discount (to $197 for 8mb and $297 for 16mb models). The phones will be sold at special kiosks within the stores, which explains why there were so many leaks so early for the new distribution channel.

I still think Target would have been a better fit to the brand, but since Apple hasn’t made an official comment, we can only guess as to its motives.

My guess is that Wal-Mart was chosen not for the number of stores (Target has 1500 US stores) but their fit to Apple’s existing geographic coverage. Wal-Mart began life as the discounter to rural America, whereas the suburban Target locations heavily overlap the existing Apple Retail Store and BestBuy locations.

Wal-Mart already sells the full range of iPod players, including the iPod Touch. The existing prices seem to be about $1.12-$1.18 below the corresponding Apple price, so the $2 discount is a big improvement.

From a practical standpoint, Wal-Mart has indicated it will be a price follower, with local stores allowed to match competitor’s prices, e.g. BestBuy’s $9 discount off of list.

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